Lesson Plan 5.4 – End-of-Fiscal Period Activities for a
Merchandising Business
Course Title – Accounting I
Session Title – End-of-Fiscal Period Activities for a Merchandising Business
Lesson Purpose – Demonstrate skill performing end-of-fiscal period activities
for a merchandising business formed as a partnership.
Behavioral Objectives








Prepare a Trial Balance after posting to the general ledger and
subsidiary ledgers.
Analyze adjustments for a merchandising business.
Calculate net income or net loss for a merchandising business.
Calculate ending capital for partners.
Calculate cost of merchandise sold and gross profit.
Prepare financial statements for a merchandising business.
Record adjusting and closing entries for a merchandising business.
Prepare a post-closing Trial Balance.
Preparation
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
120.42.C
2.e. generate Trial Balances and endof-period adjustments;
2.f. prepare financial statements;
7.a. follow oral and written
instructions;
7.b. develop time management skills
by setting priorities for completing
work as scheduled
7.c. make decisions using
appropriate accounting concepts;
7.e. perform accounting procedures
using manual and automated
methods;
7.g. demonstrate use of the numeric
keypad by touch
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C.
3.h. – prepare a trial balance;
5. The student performs accounting
functions specific for a merchandising
business. The student is expected to
explain the nature of special journals
and recording transactions in special
journals.
Lesson 5.4 – End-of-Fiscal Period Activities
For a Merchandising Business
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
TAKS Correlation:
MATH
Objective 10: The student will demonstrate an understanding of the
mathematical processes and tools used in problem solving.
Materials, Equipment and Resources:





Textbook
Accounting Software
Spreadsheet software
Multimedia presentation software
Word processing software
Lesson 5.4 – End-of-Fiscal Period Activities
For a Merchandising Business
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Teaching Strategies:


Observation
Demonstration
Learner Preparation:
There are errors in the following Trial Balance totals. Explain where the error
might be. List the first three things you would do to find the error.
Trial Balance
No.
DR
CR
1
$1,400.00
$1,300.00
2
$4,300.00
$4,219.00
3
$9,500.00
$9,450.00
4
$12,500.00
$12,499.00
5
$10,337.00
$10,330.00
6
$4,999.00
$4,909.00
7
$2,100.00
$2,500.00
What are the first three things you do to find the
error?
1.
2.
3.
1.
2.
3.
1.
2.
3.
1.
2.
3.
1.
2.
3.
1.
2.
3.
1.
2.
3.
Lesson Content:
Introduce end-of-fiscal period activities for a merchandising business using
computerized methods. Have students analyze the businesses’ financial
condition as well as progress.
Assessment:


Observation
Graded Assignments
Lesson 5.4 – End-of-Fiscal Period Activities
For a Merchandising Business
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Additional Resources:
Textbooks:
Guerrieri, Donald J., Haber, Hoyt, Turner. Glencoe Accounting RealWorld Applications and Connections. Glencoe McGraw-Hill 2000.
ISBN/ISSN 0-02-815004-X.
Ross, Kenton, Gilbertson, Lehman, and Hanson. Century 21 Accounting
Multicolumn Journal Anniversary Edition, 1st Year Course. SouthWestern Educational and Professional Publishing, 2003.
ISBN/ISSN: 0-538-43524-0
Ross, Kenton, Gilbertson, Lehman, and Hanson. Century 21 General
Journal Accounting Anniversary Edition, 7th Edition. SouthWestern Educational and Professional Publishing, 2003.
ISBN/ISSN: 0-538-43529-1.
Yacht, Carol. Southwestern Accounting with Peachtree. South-Western
Educational and Professional Publishing, 2003. Accessed 27 June
2003.
Multimedia:
Students Trial Balance System. Rutgers Accounting Research Center,
2001. http://accounting.rutgers.edu
Websites:
Automated Accounting. Department of Education, State of Tennessee,
2003 www.k-12.state.tn.us/pdf/veautoacct.pdf.
Lesson 5.4 – End-of-Fiscal Period Activities
For a Merchandising Business
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 5.4.1 – Preparing a Trial Balance
Course Title – Accounting I
Session Title – End-of-Fiscal Period Activities for a Merchandising Business
Activity Purpose – Demonstrate skill in preparing a Trial Balance after posting at
the end of the fiscal period for a merchandising business.
OLD Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
120.42.C
2.e. generate Trial Balances and end-ofperiod adjustments;
7.a. follow oral and written instructions;
7.b. develop time management skills by
setting priorities for completing work as
scheduled
7.c. make decisions using appropriate
accounting concepts;7.e. perform
accounting procedures using manual and
automated methods;
7.e. perform accounting procedures
using manual and automated methods;
7.g. demonstrate use of the numeric
keypad by touch
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
130.166.C.
3.h. – prepare a trial balance;
5. The student performs accounting
functions specific for a merchandising
business. The student is expected to
explain the nature of special journals and
recording transactions in special journals.
TAKS Correlation:
MATH
Objective 10: The student will demonstrate an understanding of the mathematical
processes and tools used in problem solving.
Materials, Equipment and Resources:


Textbook
Accounting software
Teaching Strategies:


Demonstration
Observation
Activity Outline:
Review the normal balance side of accounts. Demonstrate preparation of a Trial
Balance using a manual system. Emphasize accuracy and finding errors before
Activity 5.4.1 – Preparing a Trial Balance
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
moving to the next stage of the accounting cycle.
Have your students print a Trial Balance for CDs Galore using their accounting
software. Check the Trial Balance totals for each student before proceeding to the
next stage of the accounting cycle.
Assessment:


Observation
Graded Assignment
Quality Feature
Trial balance printout for CDs Galore accurate
Checked balances before moving to next assignment
Found any errors in the Trial Balance and corrected them
Completes in a timely manner
Activity 5.4.1 – Preparing a Trial Balance
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 5.4.2 – Analyzing and Journalizing Adjustments
Course Title – Accounting I
Session Title – End-of-Fiscal Period Activities for a Merchandising Business
Activity Purpose – Demonstrate skill in analyzing and journalizing adjustments for
a merchandising business.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
120.42.C
2.e. generate Trial Balances and end-ofperiod adjustments;
7.a. follow oral and written instructions;
7.b. develop time management skills by
setting priorities for completing work as
scheduled
7.c. make decisions using appropriate
accounting concepts;7.e. perform
accounting procedures using manual and
automated methods;
7.e. perform accounting procedures
using manual and automated methods;
7.g. demonstrate use of the numeric
keypad by touch
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
130.166.C.
5. The student performs accounting
functions specific for a merchandising
business. The student is expected to
explain the nature of special journals and
recording transactions in special journals.
TAKS Correlation:
MATH
Objective 10: The student will demonstrate an understanding of the mathematical
processes and tools used in problem solving.
Materials, Equipment and Resources:



Textbook
Accounting software
General Journal Form
Teaching Strategies:


Demonstration
Observation
Activity Outline:
Activity 5.4.2 – Analyzing and Journalizing Adjustments
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Demonstrate adjustments for a merchandising business using an Adjustments
presentation.
Have students analyze and journalize adjusting entries for CDs Galore using their
computer software. Prepare a General Journal Input Form spreadsheet, and then
journalize using this information:
The Merchandise Inventory balance at the beginning of the fiscal period was
$10,000.00 (See Activity 5.1.2). The ending inventory is $10,500.00.
Beginning inventory for Office Supplies was $550.00. Ending Office
Supplies inventory was $670.00. Beginning Store Supplies inventory was
$975.00. Ending Store Supplies inventory was $770.00. Prepaid Insurance
was valued at $600.00. Ending value for prepaid insurance is $500.00.
Assessment:


Observation
Graded Assignment
Quality Feature
Adjustments analysis uses the correct accounts
Adjustments adjusted using the correct amounts
Correct balances and accounts on Input form
Computer entries correct
Completes in a timely manner.
Activity 5.4.2 – Analyzing and Journalizing Adjustments
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 5.4.3 –Calculating Net Income or Loss
Course Title – Accounting I
Session Title – End-of-Fiscal Period Activities for a Merchandising Business
Activity Purpose – Demonstrate skill in calculating net income or loss and dividing
it between or among partners.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
120.42.C
7.a. follow oral and written instructions;
7.b. develop time management skills by
setting priorities for completing work as
scheduled
7.c. make decisions using appropriate
accounting concepts;7.e. perform
accounting procedures using manual and
automated methods;
7.e. perform accounting procedures
using manual and automated methods;
7.g. demonstrate use of the numeric
keypad by touch
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
130.166.C.
11.h. – prepare an income statement for
a corporation;
TAKS Correlation:
MATH
Objective 10: The student will demonstrate an understanding of the mathematical
processes and tools used in problem solving.
Materials, Equipment and Resources:


Textbook
Spreadsheet software
Teaching Strategies:


Demonstration
Observation
Activity Outline:
Create and demonstrate use of a Calculating Income and Loss spreadsheet for
calculating net income or loss and distributing between or among partners.
Business 1: Income Summary dr. $3,000.00, Sales $92,000, Purchases
$121,000.00, Advertising Expense $500.00, Insurance Expense $600.00,
Activity 5.4.3 – Calculating Net Income or Loss
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Miscellaneous Expense $250.00, Payroll Taxes Expense $250.00, Rent
Expense $1,200, Salary Expense $950, Office Supplies Expense $325, Utilities
Expense 750. The owners, Ken and Ben Shackleford distribute the net income
or loss equally.
Business 2: Income Summary cr. $4,000, Sales $47,000, Purchases $22,000,
Advertising Expense $250, Insurance Expense $250, Miscellaneous Expense
$125, Payroll Taxes Expense $55, Rent Expense $600, Salary Expense $350,
Office Supplies Expense $75, Store Supplies Expense $115, Utilities Expense
$276. The owners Jane and Mary Sawyer distribute the net income 60%, 40%.
Have your students use their information for CDs Galore to calculate net income or
loss. The owners of CDs Galore share the net income or loss equally.
Assessment:


Observation
Graded Assignment
Quality Feature
Net income or loss accurate for each business
Share of net income or loss accurate for each business
Completes in a timely manner
Activity 5.4.3 – Calculating Net Income or Loss
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 5.4.4 –Calculating Changes in Owner’s Equity
Course Title – Accounting I
Session Title – End-of-Fiscal Period Activities for a Merchandising Business
Activity Purpose – Demonstrate skill in calculating changes in owner’s equity.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
120.42.C
7.a. follow oral and written instructions;
7.b. develop time management skills by
setting priorities for completing work as
scheduled
7.c. make decisions using appropriate
accounting concepts;7.e. perform
accounting procedures using manual and
automated methods;
7.e. perform accounting procedures
using manual and automated methods;
7.g. demonstrate use of the numeric
keypad by touch
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
130.166.C.
5. The student performs accounting
functions specific for a merchandising
business. The student is expected to
explain the nature of special journals and
recording transactions in special journals.
11.i. – prepare a statement of equity and
retained earnings for a corporation
TAKS Correlation:
MATH
Objective 10: The student will demonstrate an understanding of the mathematical
processes and tools used in problem solving.
Materials, Equipment and Resources:


Textbook
Spreadsheet software
Teaching Strategies:


Demonstration
Observation
Activity Outline:
Demonstrate changes in owner’s equity by creating and using a Calculating Owners
Equity spreadsheet.
Have your students use the spreadsheet for these businesses:
Activity 5.4.4 – Calculating Changes in
Owner’s Equity
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Business 1: Partners are equal in share and capital. Beginning capital
$220,000, Additional Investments none, Share of Net Income $6,300, No
Withdrawals.
Business 2: Net Loss. Partner 1: Beginning Capital $44,400, Investment
$1,000, Share of Net Loss $502.00, Withdrawals $1,200. Partner 2:
Beginning Capital $64,000, Investment $2,000, Share of Net Loss $1,506,
Withdrawals $1,200.
Have your students use the spreadsheet to calculate the ending owner’s equity on their
CDs Galore business.
Assessment:


Observation
Graded Assignment
Quality Feature
Accurate capital for each partner for all three businesses
Total Owner’s Equity accurate
Completes in a timely manner
Activity 5.4.4 – Calculating Changes in
Owner’s Equity
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 5.4.5 –Calculating Cost of Merchandise Sold and
Gross Profit
Course Title – Accounting I
Session Title – End-of-Fiscal Period Activities for a Merchandising Business
Activity Purpose – Demonstrate skill in calculating cost of merchandise sold and
gross profit.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
120.42.C
7.a. follow oral and written instructions;
7.b. develop time management skills by
setting priorities for completing work as
scheduled
7.c. make decisions using appropriate
accounting concepts;7.e. perform
accounting procedures using manual and
automated methods;
7.e. perform accounting procedures
using manual and automated methods;
7.g. demonstrate use of the numeric
keypad by touch
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
130.166.C.
5. The student performs accounting
functions specific for a merchandising
business. The student is expected to
explain the nature of special journals and
recording transactions in special journals.
11.f. prepare a balance sheet for a
corporation;
11.h. prepare an income statement for a
corporation;
11.i. prepare a statement of equity and
retained earnings for a corporation
TAKS Correlation:
MATH
Objective 10: The student will demonstrate an understanding of the mathematical
processes and tools used in problem solving.
Materials, Equipment and Resources:




Textbook
Spreadsheet software
Demonstration
Observation
Activity Outline:
Create and use a Calculating CMS and Gross Profit spreadsheet to demonstrate the
Activity 5.4.5 – Calculating Cost of Merchandise
Sold and Gross Profit
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
formulas for calculating cost of merchandise sold and gross profit.
Have your students figure Cost of Merchandise Sold and Gross Profit for these
businesses:
Business 1: Beginning Merchandise Inventory $215,000, Purchases $92,000,
Ending Inventory $159,000 and Total Revenue $222,222.
Business 2: Beginning Merchandise Inventory $102,000, Purchases, $22,500,
Ending Inventory $98,000 and Total Revenue $18,999.
Ask your students to use their information from CDs Galore to calculate Cost of
Merchandise Sold and Gross Profit.
Assessment:


Observation
Graded Assignment
Quality Feature
Correct Cost of Merchandise Sold for all three businesses
Correct Gross Profit for all three businesses
Completes in a timely manner
Activity 5.4.5 – Calculating Cost of Merchandise
Sold and Gross Profit
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 5.4.6 – Preparing Financial Statements
Course Title – Accounting I
Session Title – End-of-Fiscal Period Activities for a Merchandising Business
Activity Purpose – Demonstrate skill in preparing financial statements for a
merchandising business organized as a partnership.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
120.42.C
2.f. prepare financial statements;
7.a. follow oral and written instructions;
7.b. develop time management skills by
setting priorities for completing work as
scheduled
7.c. make decisions using appropriate
accounting concepts;
7.e. perform accounting procedures
using manual and automated methods;
7.g. demonstrate use of the numeric
keypad by touch
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
130.166.C.
5. The student performs accounting
functions specific for a merchandising
business. The student is expected to
explain the nature of special journals and
recording transactions in special journals.
11.f. – prepare a balance sheet for a
corporation;
11.h. – prepare an income statement for
a corporation;
11.i. – prepare a statement of equity and
retained earnings for a corporation
TAKS Correlation:
WRITING
Objective 5: The student will produce a piece of writing that demonstrates a
command of the conventions of spelling, capitalization, punctuation, grammar, usage,
and sentence structure.
Objective 6: The student will demonstrate the ability to revise and proofread to
improve the clarity and effectiveness of a piece of writing.
MATH
Objective 10: The student will demonstrate an understanding of the mathematical
processes and tools used in problem solving.
Materials, Equipment and Resources:



Textbook
Accounting Software
Word Processing Software
Activity 5.4.6 – Preparing Financial Statements
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Teaching Strategies:


Demonstration
Observation
Activity Outline:
Demonstrate preparation of these financial statements for a merchandising business
formed as a partnership:




Income Statement
Distribution of Net Income
Owner’s Equity
Balance Sheet
Have your students print the financial statements for CDs Galore available through
their accounting software.
Ask them to write an analysis of the financial statements, answering these questions:
Income Statement:


What was the component percent of Gross Profit to Sales? In your opinion,
was this okay? Why or why not? What can be done to make it better, if
needed?
What was the component percent of Total Expenses to Sales? Were there
any expenses that seemed too high? What were they? What measures can
be taken to make sure this doesn’t happen in the next fiscal period?
Owner’s Equity Statement:



Was the capital at the end more or less than the beginning?
What caused the increase or decrease?
If it was a decrease, what can be done to change that?
Balance Sheet:
You are considering expanding the CD store to include a coffee shop. You need to get
a loan in a fairly sizeable amount. Based on your Balance Sheet, what do your think
your chances are? Why or why not? Will the Income Statement for this fiscal period
help you get the loan? Why or why not?
Assessment:


Observation
Graded Assignment
Quality Feature
Questions all answered
Writing clearly thought out, concise and logical
No errors in the document
Completes in a timely manner
Activity 5.4.6 – Preparing Financial Statements
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 5.4.7 – Understanding Closing for the Fiscal Period
Course Title – Accounting I
Session Title – End-of-Fiscal Period Activities for a Merchandising Business
Activity Purpose – Demonstrate skill in understanding the closing process for the
fiscal period.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
120.42.C
7.a. follow oral and written instructions;
7.b. develop time management skills by
setting priorities for completing work as
scheduled
7.c. make decisions using appropriate
accounting concepts;7.e. perform
accounting procedures using manual and
automated methods;
7.e. perform accounting procedures
using manual and automated methods;
7.g. demonstrate use of the numeric
keypad by touch
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
130.166.C.
3.j. – prepare a post-closing trial balance;
5. The student performs accounting
functions specific for a merchandising
business. The student is expected to
explain the nature of special journals and
recording transactions in special journals.
TAKS Correlation:
WRITING
Objective 5: The student will produce a piece of writing that demonstrates a
command of the conventions of spelling, capitalization, punctuation, grammar, usage,
and sentence structure.
Objective 6: The student will demonstrate the ability to revise and proofread to
improve the clarity and effectiveness of a piece of writing.
MATH
Objective 10: The student will demonstrate an understanding of the mathematical
processes and tools used in problem solving.
Materials, Equipment and Resources:


Textbook
Accounting Software
Teaching Strategies:

Demonstration
Activity 5.4.7 – Understanding Closing
For the Fiscal Period
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1

Observation
Activity Outline:
Using a general journal input form, demonstrate closing entries.
Have your students answer these questions either verbally or in writing:
 What are the accounts called that are closed? temporary
 Which accounts are those that are closed? Income Summary, Purchases,
Sales and Expenses
 What account is affected by closing entries but not closed? Capital
 What classification of account is Income Summary? What is its normal
balance side? In the Owner’s Equity classification, but it is neither a normal
debit nor credit balance side.
 What classification of account is Purchases? What is its normal balance
side? Cost of Merchandise account and has a normal debit balance
 How do Purchases affect owner’s equity? Decreases Owner’s Equity
 What classification of account is Sales? What is its normal balance side?
Revenue and it has a normal balance of credit
 What classification are expenses? What is the normal balance side of an
expense account? Expenses and the normal balance side is debit.
 What is the balance of the temporary accounts at the beginning of a fiscal
period? zero
 Why is it important that a new fiscal period start off with closed temporary
accounts? To match expenses with revenue during that fiscal period and let
the owners see what happened during a specific fiscal period without mixing
them
 What is the last step of the accounting cycle? Post-Closing Trial Balance
 What is the purpose of the last step of the accounting cycle? To be sure the
general ledger is balanced after closing entries
 What accounts show up in the last step of the accounting cycle? Real
accounts—Assets, Liabilities and Owner’s Equity. Temporary accounts are
closed and are not on the report.
Ask your students to perform period end closing on CDs Galore, using their accounting
software. Have them print a Post-Closing Trial Balance.
Activity 5.4.7 – Understanding Closing
For the Fiscal Period
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Assessment:


Observation
Graded Assignment
Quality Feature
Answers questions on closing entries and ending the fiscal
period
Post-Closing Trial Balance accurate for CDs Galore
No accounts on the Post-Closing Trial Balance that should not
be there
Completes in a timely manner
Activity 5.4.7 – Understanding Closing
For the Fiscal Period
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1